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Completed Equity
Residential
Pintar Residential Fund III
Multiple Locations
INVESTMENT STRATEGY
INVESTMENT TYPE
Equity
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100% funded
Offered By Pintar Investment Company
17.57%* TARGET IRR 15.0%-18.0%
9.0%* TARGET AVG CASH ON CASH
* TARGET EQUITY MULTIPLE
Estimated Hold Period 3 years
Estimated First Distribution
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Overview
Investment Highlights
Experienced sponsor who has invested over $1 billion in over 5,000 single family homes for institutional clients such as KKR and Colony American Homes.
Sponsor has rolled its two previous existing funds into this fund, providing the opportunity for immediate cash flow to RM investors.
Auction and probate sale purchases, along with economy of scale efficiencies related to renovation costs, allow Sponsor to buy and renovate at below market costs.
Management
Cumulative Distributions

Pintar Investment Company

Pintar Investment Company ("PIC"), based in San Juan Capistrano, California, is a fully integrated residential real estate firm. PIC has expertise in real estate investment management, acquisition, disposition, development and redevelopment of both residential and commercial projects throughout the United States. Since its inception, PIC has invested over $1 billion in single family residential homes.

PIC's executive team has over 50 years of combined real estate development and investment experience and has produced more than $10 billion of real estate transactional volume since 1993.

http://www.pintarinvestmentcompany.com/site/index.php
  • Jeff Pintar - CEO - Partner
  • John Kralik - President - Partner
Jeff Pintar - CEO - Partner

Prior to founding Pintar, Jeff was the National Retail Partner and member of the Investment Committee at Panattoni Development Company Inc. During Jeff's tenure at Panattoni, the company developed and delivered over 40 million square feet of new commercial projects valued in excess of $5 billion.

Jeff began his real estate career with CB Richard Ellis and became one of the nation's leading revenue producers for the firm receiving Circle of Excellence awards in 1996 - 2003.  In 1999 Jeff moved to Australia where he sat on the Asia Pacific Senior Leadership Board which oversaw the regions 20 offices and Retail Business Line.

John Kralik - President - Partner

John is responsible for all operational aspects of the organization, acquisitions, disposition, and management of funds.  Before joining Pintar in 2009, John was president and owner of JT Investment Properties in Los Angeles, specializing in the acquisition and disposition of trustee sale single family residences throughout Southern California.

Prior to joining J.T. Investment Properties, John was a Vice President at DC Commercial in Century City for five years, specializing in the acquisition and sale of retail and office properties in Los Angeles County.

Track Record

Founded in 2009, Pintar Investment Company is an experienced private real estate investment company which has acquired over 6,000 single family residential homes at a total cost of over $1 billion.

Business Plan
Property

At A Glance

Investment Type: Semi-Blind Fund
Investment Strategies: "Buy and Hold" and "Fix and Flip"
Property Type: Single Family Residential Homes ("SFRHs")
Current Sponsor Invested Equity: Approximately $7,000,000
Current Other Investor Equity: Approximately $16,000,000
Current Portfolio Debt: Approximately $14,000,000 (~38% Loan to Value)
Current Total Fund Holdings: Approximately $37,000,000 in Total Assets 
Target Fund Size: $75,000,000 in Total Equity 
RM Investor Projected Hold Period: 3 years
Average Existing SFRH Acq. Cost:  Approximately $231,000
Range of Existing SFRH Acq. Costs: Approximately $56,000 - $1,779,000
Current Investment Locations*: Southern CA, Las Vegas and Georgia


Distributions to Realty Mogul 44, LLC:
1) First, 6% cumulative, annual
Preferred Return to RM 44;
2) then, 0.50% of portfolio value asset management fee to Sponsor;
70% / 30% thereafter (70% to investors)
Projected First Distribution: First distribution projected to occur in May 2016
Distribution Schedule: Quarterly
Investor Funding Deadline: December 4, 2015 
Estimated Closing Date: December 15, 2015

Note: While the Fund currently only owns assets in Southern CA, Las Vegas and Georgia, it has no geographical limitations as to where it may invest and has suggested it may consider other markets for investment in the future.

Investment Details

PICR Fund III, L.P.

PICR Fund III, L.P. (the "Fund") was founded in 2015, and is a continuation of Pintar Investment Company’s ("PIC" or "Sponsor") two existing funds, Pintar Investment Company Residential, L.P. ("PICR") and Dhandho Residential Rental Fund ("Dhandho"). 

Pintar Investment Company Residential, L.P. ("PICR") 

PICR, which was founded in 2010, was the Sponsor's first investment vehicle for which they acted as the principal (as opposed to acquiring homes for institutional clients).  PICR’s focus was primarily on "fix and flip" SFRHs.  PIC’s 2Q 2015 investor letter states that the fund has averaged a net quarterly return of approximately 8.4% since inception.  The Fund's existing portfolio as of September 3, 2015 may be found attached to the Management tab.  Examples of SFRHs bought and sold under the "fix and flip" strategy by the Fund can be seen below.

Property Background*

  • Distressed short sale purchase of a 1978 vintage, fire-damaged, four bedroom, two bathroom home in San Diego
  • Remodeled all bathrooms in the home and replaced all window and appliances, while repairing any structural fire damage
  • Master bedroom was reconfigured to maximize space and increase ceiling height
  • Painted and landscaped the property and refinished the pool in the backyard
  • Sponsor completed the renovation for approximately $36,000, but estimates retail cost for the repairs to be in excess of $70,000
  • Renovation took seven weeks to complete and the property was sold within 161 days of its purchase for a $59,000 gross profit and 9.2% unlevered gross return

Property Background*

  • Probate sale purchase of a 1978 vintage, three bedroom, two bathroom San Diego home which had fallen into complete disrepair with serious foundational and structural issues
  • Added a new master suite and completely remodeled the kitchen and living room areas
  • Installed larger windows in the rear of the home to accentuate the mountain view from the living room, dining room and kitchen
  • Replaced the roof and several structural supports of the home
  • Sponsor completed renovation for less than $49,000, but estimates retail cost for the repairs to be in excess of $100,000
  • Renovation took five weeks to complete and the property was sold within 150 days of its purchase for a $49,000 gross profit and 10.91% unlevered gross return

​​Note: The above case studies were provided to Realty Mogul by the General Partner of the Fund, and Realty Mogul has not vetted the claims made herein.

Dhandho Residential Rental Fund ("Dhandho")

Dhandho, which was founded in 2012, was the Sponsor’s second investment vehicle for which they acted as the principal.  Dhandho’s focus was on "buy and hold" SFRHs.  PIC’s 2Q 2015 investor letter states that the fund has averaged a net quarterly return of approximately 5.9%.  The historical returns for both PICR and Dhandho, as well as an example of the PIC quarterly investment letter, may be found on the right hand side of the Financials tab.

Rolling these two existing funds into the Fund has generated current cash flow to the Fund's existing investors.  Investors in Realty Mogul 44, LLC could benefit from receiving current cash flow as the majority of existing equity within the fund is already placed.  This is anticipated to increase cash yields during the typically low-yield investment period of the Fund.

The investment focus of the Fund is to follow what was done in Dhandho and PICR.  The Fund is currently approximately 80% "buy and hold" and 20% "fix and flip," in terms of number of SFRHs held in the portfolio.  While the investment rate into new properties is likely to be approximately 70/30 buy/hold (although this is to be at Sponsor's discretion), the short hold period for "fix and flip" projects vs. "buy and hold" projects means that the portfolio could end up being concentrated above 80% in "buy and hold" targets in the future (based on assets under management).  Furthermore, should SFRH values trend downwards during the investment lifetime then assets which were originally bought under the "fix and flip" strategy may instead be held for cash flow in the "buy and hold" strategy until such time as market conditions allow for more favorable disposition of the assets.  

To assist RM investors, assorted Case-Shiller historical data on single family home values may be found attached to the Management tab.  For an explanation on the Case-Shiller index, and full Case-Shiller data, visit the Case-Shiller website.

Investment Highlights

  • Experienced Sponsor: PIC has invested over $1 billion in over 5,000 SFRHs for institutional clients such as KKR Beazer Pre-owned Rental Homes and Colony American Homes Inc.
  • Low Investment Minimums: With the new class of interests, and because RM will be aggregating investor funds, the effective minimum investment amount for Realty Mogul investors to invest in the Fund will be reduced from $500,000 to $25,000 (as compared to investing in the Fund directly through the existing class of interests).
  • Economies of Scale Allow for Competitive Pricing in Rehab Costs: PIC has a strong concentration in all markets which it currently acquires properties.  Due to PIC's history operating in these markets, its vendor relationships allow for pricing on rehab assignments which is competitive with, and often less than, pricing which would be available to smaller-scale investors or home owners.
  • All-Cash Auction Purchases of SFRHs Allow for Below Market Value Acquisition Costs: PIC's strategy of acquiring many of its properties at all-cash auctions has historically allowed for favorable acquisition bases relative to market value.  PIC has on multiple occasions acquired a SFRH through an all-cash auction and proceeded to dispose of the same SFRH for a 10%+ profit soon thereafter without having invested additional rehab funds into the property.
  • Existing Portfolio Allows for Current Cash Flow: The Fund's existing portfolio, which is in excess of $37 million, allows for current cash flow to investors.  As opposed to investing at the inception of a fund with no assets and experiencing little to no distributions during the investment period, RM investors should receive immediate cash flow from their investment in the Fund.  
  • In-Place Team Should be Capable of Upscaling the Fund: The team which Pintar had in place when it acquired over $1 billion in SFRHs for institutional clients is virtually the same team it has in-place now.  However, the team now is considerably more seasoned, as the asset managers, who were hired straight from college, have now ran their portfolios for several years.  Furthermore, asset managers, who handle most of the fund’s day-to-day decision making, receive commission based compensation on their respective portfolio’s production, which heavily incentivizes them to maximize their respective portfolios’ success.  The organizational chart for the Fund may be found on the right hand side of the Management tab
  • Management Team is Highly Invested in the Fund: PIC managers have nearly $7 million of their own personal wealth invested in the Fund.
  • Low Leverage Limits: Properties held by the Fund are currently levered at no more 60% - 65% of market value, providing a buffer between existing home values and leverage levels for the properties should home values contract.  Similarly, in a descending rental rate market, the general partner of the Fund will be able to rent the units for a lower rental income figure and still be able to cover interest expense versus if the properties were more highly levered. 

Risks and Risk Mitigation*

  • General Risks of Investment in the Fund per the General Partner of the Fund:  Cash flow will be derived from the resale of properties and/or rental payments. Payments to investors will be contingent on the Fund’s successful operation; therefore, the economic success of an investment in the Fund will depend directly upon the resale market and/or lease(s).  A failure to sell a property and/or a vacancy by a tenant that is not replaced or is replaced at less attractive terms can adversely affect operating results or render the sale or refinancing of the Fund difficult or unattractive.  No assurance can be given as to the accuracy of certain assumptions related to the future sale and/or occupancy of the properties within the Fund by tenants or the ability of such tenants’ to pay rents or costs for the properties within the Fund, as these matters will depend on events and factors possibly beyond the control of the limited liability company members.  Such factors include continued validity and enforceability of the leases in the event a tenant defaults thereunder, the financial resources of the tenant, adverse change in local population trends, market conditions, neighborhood property values, local economic and social conditions, supply and demand for property similar to the properties within the Fund, competition from similar properties, environmental hazards and liabilities caused by third parties, interest rates and real estate tax rates and assessments, governmental rules, regulations and fiscal policies, zoning restrictions, the enactment of unfavorable environmental or hazardous material laws, labor and material costs, uninsured losses, effects or inflation and other risks.
  • Forward-Looking Statements: Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks. We use words such as “anticipated,” “projected,” “forecasted,” “estimated,” “prospective,” “believes,” “expects,” ”plans,” “future,” “intends,” “should,” “can,” “could,” “might,” “potential,” “continue,” “may,” “will,” and similar expressions to identify these forward-looking statements.
  • Illiquid Investment - Transfer Restrictions & No Public Market: The transferability of membership interests in Realty Mogul 44, LLC are restricted both by the operating agreement for that entity and by U.S. federal and state securities laws.  In general, investors will not be able to sell or transfer their interest for a minimum of three (3) years, unless the general partner of the Fund permits redemption of forty percent (40%) or more of the then outstanding shares of the fund, in which case Realty Mogul 44, LLC investors will be offered the opportunity to sell their shares at the current market value on a pro rata basis with other investors (i.e., subject to the availability of liquidity in the Fund to pay out investors).  There is also no public market for the investment interests and none is expected to be available in the future. Persons should not invest if they require any of their investment to be liquid. This is particularly important for persons of retirement age, who should plan carefully to assure that their assets last throughout retirement.
  • Review of Fund PPM: Before making any investment decision, potential investors in Realty Mogul 44, LLC should carefully review the Confidential Private Placement Memorandum of the Fund ("PPM"), including but not limited to the Risk Factor section and all exhibits of the PPM.  The PPM contains additional risk factors and information regarding the Fund that are not contained herein.  Note that RM investors will be purchasing a separate and distinct class of interests from those held by existing investors in the Fund.  The issuance of the new class of interests is subject to certain approval rights held by existing investors, and details of the rights and preferences of holders of the new class of interests will be shared with RM investors prior to the funding as a supplement to the existing PPM.  
  • Management Risk: Investors will be relying solely on the general partner of the Fund for the execution of its business plan. That general partner in turn may rely on other key personnel with relevant experience and knowledge, including contractors and consultants.  The general partner of the Fund has acquired and managed more than $1 billion in over 5,000 single family residential homes on behalf of institutional clients, namely Beazer Pre-Owned Rental Homes, Inc. and Colony American Homes Inc., has approximately $7 million of his own capital invested into the Fund and Jeff Pintar, the CEO of the general partner, is personally guaranteeing all debt on the properties.  Members of the Fund (including Realty Mogul 44, LLC) will agree to indemnify the managers in certain circumstances, which may result in a financial burden if any litigation results from the execution of the business plan. Realty Mogul 44, LLC is investing in the Fund under a different investor class than current investors in the fund, who, although able to liquidate their investments on an annual basis are also required to invest a minimum of $500,000 in the fund; RM Manager, LLC, the manager of Realty Mogul 44, LLC, is expected to be treated as an investment adviser exempt from federal or state registration under this strategy.
  • Uncertain Distributions: The general partner of the Fund cannot offer any assurances that there will be sufficient cash available to make distributions to its members (including Realty Mogul 44, LLC) from either net cash from operations or proceeds from the sale of the asset. The general partner, in its discretion, may retain any portion of such funds in the Fund.  However, because the Fund currently has substantial existing assets (in excess of $37 million in holdings), this does provide the Fund with the potential to generate current cash flow for and distributions to its investors.  As opposed to investing at the inception of a fund (that has no existing assets) and experiencing cash drag during the initial investment period, Realty Mogul 44, LLC and its investors have the potential to receive current cash flow from their investment.  
  • General Economic and Market Risks for Residential Real Estate:  While the Fund has conducted significant research to attempt to accurately predict projected rental rates and sales prices of the Fund’s assets in the future, the projections may not be accurate and may be materially lower than projected based on a number of factors including future economic conditions and the interest rates available for the assets.  The real estate market is affected by many other factors, such as general economic conditions, the availability of financing and other factors, including supply and demand for real estate investments, all of which are beyond the control of the Fund.
  • Market and Asset Class Concentration Risk:  While the general partner of the Fund's stated objective is to assemble a diversified portfolio, there can be no assurances that the Fund will not be subject to substantial market concentration risk.  The real estate market generally, and the Fund's strategy in particular, may result in certain opportunities representing an outsized proportion of the total fund. For instance, approximately 30% of the Fund's existing portfolio consists of properties in Las Vegas, Nevada, a market that was significantly hit during the downturn.   The success or failure of this market, and other transactions, may have a correspondingly outsized effect on the rates of return for investors in Realty Mogul 44, LLC.  Additionally, there can be no assurances regarding the extent of any correlation among all or any set of the Fund’s acquisitions.  
  • Investing in an Existing Fund:  If the valuation method used to determine the value of the existing assets in the Fund overstates the value of the existing assets in the Fund, then new investments into the Fund would suffer immediate dilution (or decrease in value) of their interests.  Under the “fix and flip" strategy assets are held at acquisition cost until disposed of.  Under the “buy and hold" strategy the Fund obtains a “Brokers Opinion of Value” (BOV) report quarterly to set property values, and on an annual basis the properties held under the "buy and hold" strategy receive a full appraisal.  The most recent of this quarterly BOV or appraisal is used for valuation.  This brief summary of the valuation methods is not intended to be a substitute for the description of the valuation methods used as described in the PPM.  Any potential investors should review the valuation sections of the PPM prior to making an investment decision.  To the extent the current valuation of the Fund's existing assets differs from actual market value upon Realty Mogul 44, LLC's investment, investors in Realty Mogul 44, LLC could experience dilution or a decrease in value of their investment.    
  • Adverse Market and Economic Conditions:  Local conditions in the markets may significantly affect occupancy, rental rates, and the operating performance of each property.  These risks include plant closings, industry slowdowns, and other factors that could potentially affect the local economy. Rent control or rent stabilization laws, or other laws regulating single family homes, could also prevent the Fund raising rents or selling homes.  Adverse economic conditions such as increases in property taxes, utilities, compensation for on-site associates and routine maintenance could cause an increase in the Fund’s operating expenses, which would negatively affect the fund’s financial performance.   
  • Competitive Housing Alternatives: Properties owned by the Fund will compete with other housing alternatives to attract residents, including apartments, other single family homes, mobile home parks, and condominiums which are available for rent or sale.  Operating single family homes as rentals is more capital and management intensive than other alternatives, like apartment buildings.  A strategy of rehabbing properties has significant risk as the cost of labor and materials can change, delays may occur and unforeseen changes to the scope of a project or market property values will affect the economics of an investment.  Competitive residential housing in a particular area could affect the Fund’s ability to sell its homes, rent its homes for occupancy, and/or to increase or maintain home rental rates. 

*The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Investor Document Package for a discussion of additional risks.  We recommend that you consult with a Financial Adviser, Attorney, Accountant, and any other professional that can help you to understand and assess the risks associated with any investment opportunity.  All investment involves risk of loss, and therefore cannot be guaranteed.  As with any investment, past performance is no guarantee of future results.

The above presentation is based upon information supplied by the Sponsor.  Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 44, LLC, along with their respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein.  The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.

Property Details

Current Portfolio Description
 
Market
% of Total
Portfolio Value
% of Value /
# of SFRHs 
(Buy and Hold)
% of Value /
# of SFRHs 
(Fix and Flip)
Average
Purchase Price
Greater Southern CA
(excluding SD)
39% 100% / 72 0% / 0 $202,000
Las Vegas 24% 89% / 47 11% / 5 $170,000
San Diego area 35% 0% / 0 100% / 28 $468,000
Georgia 2% 100% / 9 0% / 0 $74,000
Totals 100% 62% / 128 38% / 33 $231,000

(1) The above table represents the approximate composition of the PICR Fund III, L.P. portfolio as of September 3, 2015.

 

Location

The Fund currently owns single family residential homes ("SFRHs") throughout Southern CA, as well as in Las Vegas, NV and Georgia, and is anticipated to look to continue acquiring SFRHs in those markets.  Additionally, PIC is not geographically limited in which markets it may acquire properties and has stated that it could potentially consider expanding its geographic focus in the future.

In the Greater Southern California area, excluding San Diego, the Fund currently only pursues a "buy and hold" strategy.  The Fund views the economics of the market as favorable to this strategy.  Below are two charts which the General Partner of the Fund feels represents the demand for rental housing in this market.

The above presentation is based upon information supplied by the Sponsor.  Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 44, LLC, along with their respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein.  The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.

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Financials
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Disclaimers/FAQs
Disclaimers

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